Canadian banking stocks soar on U.S. law change
By Ian Karleff
TORONTO, Nov 15 (Reuters) - Investors continued to apply higher valuations to Canadian
banking stocks on Monday after last week's killing of depression-era legislation in the U.S.
opened the way for a new wave of financial conglomerates.
Replacing the Glass-Steagall Act with the Gramm-Leach-Bliley Act of 1999 removes
restrictions on who can own banks and what banks can do. That effectively expands the
market for Canadian banks with U.S. operations or could spur further acquisitions by Canadian banks in that country.
''The playing field is level. The banks can get into the insurance industry, insurance into brokerage, brokerage into banks and
insurance,'' said Peter Chandler, director and senior vice-president at Canaccord Capital.
Canadian banks likely to benefit the most were among the top percent gainers in the banking sector on Monday.
Canadian Imperial Bank of Commerce (Toronto:CM.TO - news) , owner of U.S. investment banker CIBC Oppenheimer,
rose C$1.35 or 4 percent to C$35.70, and Toronto-Dominion Bank (Toronto:TD.TO - news) with its discount brokerage TD
Waterhouse a strong U.S. player rising 4 percent, or C$1.45 to C$36.70.
''This means more competition, more consolidation, and more movement in that direction in other jurisdictions over time
including Canada,'' added Chandler.
The Bank of Montreal (Toronto:BMO.TO - news) with about 1 million clients at its Chicago-based Harris Bank, rose C$1.25
to C$57.50.
Royal Bank of Canada (Toronto:RY.TO - news), in the midst of shopping for a mid-sized U.S. institution, also rose about 2
percent to end the day up C$1.55 to C$68.05.
Canadian banks are also set to report fourth-quarter earnings starting on Thursday with Toronto-Dominion.
Banking analysts are expecting earnings per share to climb as much as 20 percent from the same quarter last year, albeit a
quarter marred by markets that were roiling from financial woes in Russia and Asia.
Also, the U.S. Federal Reserve's Open Market Committee meets on Tuesday to decide the direction of interest rates. Although
market watchers remain divided about whether the Fed will raise rates by another 25 basis points, recent inflation data suggests
the U.S. economy is still healthy without major signs of inflation.
''There seems to be a friendlier interest rate outlook over the next couple of days, and that is the main driver of what we saw
Friday and again today,'' said banking analyst Susan Cohen at Dundee Securities.
($1=C$1.46)
More Quotes
and News:
Bank of Montreal (Toronto:BMO.TO - news)
Canadian Imperial Bank of Commerce (Toronto:CM.TO - news)
Royal Bank of Canada (Toronto:RY.TO - news)
Toronto-Dominion Bank (Toronto:TD.TO - news)
Related News Categories: Canadian Market News, US Market News
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